Power stocks are trading strong led by Tata Power and National Hydroelectric Power Corporation Limited (NHPC). India's largest power producer National Thermal Power Corporation (NTPC) has announced results for the quarter ended September 2011. The company reported a 14% YoY growth both in net sales and in net profits for the half year period. Operating margins declined to 20.7% from 21.7% in 1HFY11. This was largely on account of higher fuel costs. In addition to weaker operating margins, fall in other income dampened profit growth. The net profit margins, however, remained stable due to lower deprecation cost and interest outgo. The company had capacity of 34,854 mega watt (MW) at the end of September 2011 and is targeting capacity addition of 4,320 MW in FY12. While the company has coal linkages for 9 new projects with a total capacity of 10,920 MW and a gas supply agreement for 14.5 MMSCMD of gas, fuel supplies remain a hindrance to growth.
Engineering stocks are trading weak. Thermax and Areva T&D are the biggest gainers, while ABB and Usha Martin are the biggest losers. According to a leading financial daily, Bharat Heavy Electricals Ltd (BHEL) and Larsen and Toubro (L&T) could be asked to initiate anti-dumping action against Chinese gear coming into India. This move comes on the basis of evidence of assistance by Chinese Government to its gear manufacturers. The issue comes at a time when equipment contracts for an estimated 37,626 MW of upcoming power capacity are estimated to have been placed with Chinese vendors. Currently, equipment imports attract zero duty for thermal projects of 1,000 MW and above.